Hugg-a-Bugg Soft Toys manufactures teddy bears, selling 35,000 teddy bears at $24 per teddy bear. Fixed operating costs are $100,000 while variable operating costs are $18 per teddy bear. The manufacturer has annual interest charges of $10,000 on long-term debts, preferred dividends of $11,200 and a 30% tax rate. What does the term leverage mean? How are operating leverage, financial leverage, and total leverage related to the income statement? (2 Points) Calculate the degree of operating leverage (DOL), the degree of financial leverage (DFL) and the degree of total leverage (DTL) for Hugg-a-Bugg Soft Toys manufactures. (3 Points) Hugg-a-Bugg Soft Toys manufactures plan a marketing campaign on targeting 10% increase in current sales in the coming year. Use DOL, DFL, and DTL to calculate the percentage changes in EBIT and earnings available for common shareholders. Justify your calculations. (2 Points) Explain the EBITEPS approach to capital structure. Is this approach consistent with maximization of the owners wealth? (3 Points)